Supporting children financially teaches the wrong lesson

Money gifts to children give them the wrong impression

As a Certified Financial Planner, I sat with a couple recently. The wife said, “I want to help our children.” Her husband said, “We have been helping them for many years. Gifting money to children only teaches them dependence.” Before they got in a fight determining whether assistance for children is appropriate, I suggested that they differentiate between two types of gifts to children. It is one thing to give adult children an occasional gift, even to help them make a large purchase like a car or a home. It is another thing to give adult children a regular allowance.

There have been so many cases that I have seen parents give ongoing support to their children. Not only does this teach the children the wrong lesson about becoming independent, but it can also be financially dangerous for the parents.

How can you speak to your children about cutting them off?

Helping others is important, and if you have the means to help financially, you need to decide whether you want your dollars to go to charity or towards your children. You can tell your kids that your salary is meant to support your family, not theirs. And even more importantly, you don’t want to be responsible for enabling someone to become forever dependent. Moreover, though communication with children is sometimes difficult, it can be easier if you show them your financial plan. Seeing in black and white how your gifting to them is causing you long-term financial strife, you can discuss how you are becoming financially responsible and how you want them, too, to learn the rules of proper budgeting, saving, and investing.

Is giving money the same as giving help?

The highest form of charity according to Maimonides is helping people help themselves. The best gift you can give your children is helping them find a job, which, as a parent, really means educating them. Paying their monthly cell phone bill or pitching in toward the rent for a long time is only enabling them to live above their means.

Ultimately, the couple that came into my office decided that they would give a few small gifts to the children from time to time but they would make sure that the children knew that these were not gifts that they could expect on an ongoing basis. That way, the children learn to become financially independent. If you would like to help your children, encourage them to create their own financial plan.